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Why non-bankers love Wall Street bonuses

Preparing pork belly at New York catering company Sonnier & Castle

This is the time of year when Wall Street bankers get their bonuses. The numbers can be staggering to those outside finance, with six-figure average payouts and high-level bonuses spiraling into the millions. This year looks to be uneven, with some bankers doing well and others, especially bond traders, getting less.

That money eventually flows through New York’s economy to a lot more people than one might expect, including armies of middle class workers and small business owners.

There may be national distaste for Wall Street, but there are many who don’t work there who nonetheless hope the big banks do well.

The New York catering company Sonnier & Castle produces elaborate dinners that cost hundreds of dollars per person. Recently, it catered the movie premiere of "The Wolf of Wall Street."

“A third of our business comes from the financial industry,” estimates co-founder David Castle. “Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.”

Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again on personal events. That means their bonuses are more important than ever.

The catering company laid off workers in the financial crisis. But with sales up 20 percent last year amid a recovering economy, Castle is hiring again, adding staff positions as well as part-time servers and cooks, who rely on the extra income or use the jobs as stepping stones to full-time work.

"They're receiving income and in turn, they turn around, they spend it," says New York University economics professor Lawrence J. White. "The initial beneficiaries are the people who receive the bonus, but it doesn't stop there."

It's what economists call a multiplier effect, the rippling economic impact of all that bonus money as it passes through various hands.

Speaking of candlesticks, there are some rather nice ones in homes where Darren Henault designs the interiors.

Photos on the walls of his studio show the many rooms he created. They include the homes of some of the top people in finance.

The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.

"I have definitely had people say to me, 'I did not have a great year. Let's dial back,'" Henault says.

Many people reading this won’t care if a rich banker is less rich. It might even make them smile.

But before anyone gets too drunk on schadenfreude, it’s worth remembering that the fate of big banks can directly affect small business. If a banker scores a sweet bonus, he can give Henault a bigger budget. That means more pricey custom elements, and thus a lot more people going to work.

"More people are involved in the making of the higher-end things than the lower-end things," Henault explains, listing the types of people a big project will employ. "A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine."

And those giant bonuses are taxable, which means revenue from them helps fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay.

Attacking bank bonuses is ever fashionable, providing meaty, easy targets for everyone from newspaper editorial writers to Washington politicians. But for regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They’re vital.

Mark Garrison: We are miles from the financial district, inside the busy kitchen of New York catering company Sonnier & Castle. That sizzle is the sound of swine near the end of the line.

Later, the glistening cube will be skewered, then passed around by an impeccably dressed young server at a very fancy party.

The company’s most elaborate dinners cost hundreds of dollars per person. Today, the team’s prepping for an event for a famous fashion designer. Recently, it catered the movie premiere of “The Wolf of Wall Street.” Co-founder David Castle says the real Wall Street is critical to the company’s bottom line.

David Castle: A third of our business comes from the financial industry.

Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again. That means their bonuses are more important than ever.

Castle: Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.

His catering company laid off workers in the financial crisis. But with sales up 20% last year, Castle is hiring again, full-time staff as well as part-time servers and cooks who rely on the extra income. From the owners to the dishwashers, the whole company reaps the benefits of Wall Street bonuses.

Lawrence J. White: They’re receiving income and in turn, they turn around, they spend it.

That’s what economists like NYU’s Lawrence J. White call a multiplier effect. All that bonus money ripples across the entire economy.

White: The initial beneficiaries are the people who receive the bonus, but it doesn’t stop there.

A big bonus banker orders a fancy steak dinner from a server, who uses the big tip to splurge on new home furnishings. Everybody wins. As the old rhyme goes: the butcher, the banker, the candlestick maker. Ok, I did tweak it a bit. Speaking of candlesticks, there are rather nice ones in homes where Darren Henault designs the interiors.

In his studio, he shows photos of rooms he created. They include the homes of some of the top people in finance. The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.

Darren Henault: I have definitely had people say to me, ‘I did not have a great year. Let’s dial back again.’

Chances are, you don’t care if a rich banker is less rich. But think about it this way. If a banker gets a larger bonus, he can give Henault a bigger budget, which helps small businesses.

Henault: More people are involved in the making of the higher-end things than the lower-end things.

If that banker goes for pricey custom elements, a lot more locals are going to work.

Henault: A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine.

And those giant bonuses are taxable, which means they help fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay. For regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They are absolutely vital. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.
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Is this story a joke!?!? I find this line of reasoning the least compelling argument adovacating for trickle down theory. Apparently the justification for increased economic inequality has devolved from the already flawed "job creator" through investment rational to philanthropy through consumption of ostentatious luxuries. I hope the Republicans use this platform in 2016!

Wow, what a whopper! This segment could have been written in the 19th century: the happy servants benefiting from the largess of their masters. How Gilded Age of you.

Of course, if you ask real economists, it's not the overlords of Wall St. at the top of the income bracket that actually spend their money but the middle and lower classes. But what would MarketPlace know about economics? They're still mired in the fantasies of a 100 years ago.

P.S. Notice nowhere in the broadcast were the words 'trickle down' used though this is precisely what the segment was all about. I guess MarketPlace is too chicken to stand behind the ideology it's promoting.

I also created an account because I was so offended by this story. This resembles an infomercial promoting "trickle-down economics" with nothing but anecdote to 'support' it. I listen to the program for journalism, which this was not. I am unlikely to continue listening.

I created an account because I was so offended by this story. It attempts to educate but is harmful and misleading. Mark Garrison must be astoundingly naive or a shill. How did the editors let this get on the air? Why were other academics who knew the overall economic story presented (trickle-down) to be baloney not consulted?

Garrison's premise is that bonus money goes to support local workers IF IT IS SPENT in the particular ways he described. UNFORTUNATELY, he does not say HOW MUCH of the bonus money will go to support local jobs versus cushioning retirement funds or buying assets somewhere else in the world. The problem with his story is that the rich do not spend all their windfall income, unlike the poor. The poor are not meeting their basic needs and will spend all the money they get. The rich will save or invest most of the extra money they get. Extra cash in the hands of the poor helps the economy more than it would in the hands of the rich.

Separately, the reason Democratic politicians do not talk about wall street bonuses is not because they are such a great source of government revenue. If that were their concern, there would be many fewer loopholes for these individuals and their employers to sidestep their taxes. The reason Democrats don't talk about this is because they want Wall Street campaign contributions as badly as Republicans do.

Arguing for trickle-down economics? I can't believe this on NPR.

Disgraceful. I heard this story on the way home from work, and it sickened me a little. What horrendous cheerleading for the haves to have more. Please take the blinders off for the next story APM.

Please go to Democracy Now story Jan 3rd where a more rational suggestion was made for the extra bonus billions. Donate the 91 billion in bonus money to the Other 98%, the people who lost jobs, homes, health care as a result of Banksters on Wall Street. We all know that the restaurant money they spend does not go up because they got an extra billion. They had enough to buy a big steak before their bonuses.

..."there are many who don’t work there who nonetheless hope the big banks do well." Seriously? Did you really claim that there are people barely hanging on to their homes are "hopting the big banks do well?" Oh those poor folks on Wall Street who must wait a whole year for a bonus to upgrade to a newer Lexus. As for tipping...that too stays at the top as these folks don't tip but keep their hands in their greedy pockets. Please Mr. Garrison. Keep it real will you?

Absolutely shameful. The only way I will forgive Marketplace is if they devote as many shows as it takes to playing the audio to Robert Reich's "Inequality for All". Please lead in with The Who's "Wont get fooled again".

What PR firm provided the decanter of Kool-aid behind today's bank bonus story? Mark Garrison must have drunk freely from it before he wrote how a small number of people benefit from purchases made with bank bonus money. As if that is good for the economy of the country. It's the concentration of that money in a small area that is killing us, like a blood clot. I'll question the motives behind all Marketplace stories after that nonsense.

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